November 25th, 2016
Reliance Ports Gets Irregular Tax Benefits
A report by Comptroller and Auditor General of India (CAG) was tabled in the Parliament on Tuesday which stated that there had been an irregularity in allowing deductions by the Assessing Officer which has resulted in tax effect of Rs 2,716.79 crores.
The report mainly focussed on the big corporate houses involved in misusing the provisions of Income Tax deductions in infrastructure projects.
Income Tax Department was also pulled up by CAG for giving tax benefits of Rs 1,767 crore to Reliance Industries. The deduction was allowed to the port and terminal arm of the company on the basis that it was for public facilities.
Rs 5,245.38 was allowed as a deduction to Reliance Ports and Terminals Ltd without examining the eligibility criteria. The deduction was towards the construction of four private jetties at Port Sikka, Gujarat.
As per CAG, since the jetties were not for the public, but for the private use of Reliance Ports, the deduction allowed was unjustified.
The IT department differed from the observations made by CAG and stated that IT Act does not distinguish between ‘public facility’ and ‘private facility’ to claim deductions under Section 80 IA.
IT department further cleared that the use of the jetties was open to other people when RIL Group of companies did not use it, as reported by The Economic Times. The CAG report is based on test audit conducted by CAG between 2012-13 and 2014-15.
CAG has sought help from the Central Board of Direct Taxes (CBDT) to find out which other companies used this facility.
So far, IT department has not submitted any list of other people or corporations who have used these jetties when not in use by RIL.
Deduction u/s 80-IA of Income Tax Act, 1961
The deduction is claimed in respect of profits and gains from industrial undertakings or enterprises which are engaged in infrastructure development.
Sports is education too
Give sports its due importance.